Surge into Stock Mutual Funds Is Most in 11 Years

January 15th, 2013
in contributors

by Lee Adler, Wall Street Examiner

Surge into stock mutual funds is most in 11 years (But It Was Just A Reversal of “Beat The Cliff”)


The flow of cash into stock mutual funds the first week of 2013 was the largest weekly inflow in more than 11 years. Mutual funds investing in U.S. stocks attracted $4 billion in net deposits during the weeklong period that ended Wednesday,...

Follow up:

That Big Inflow To Stocks Ain't All It's Cracked Up To Be Wall Street Journal (blog)

US stock mutual funds gain $7.5 billion, most since 2001: Lipper Reuters

Fiscal cliff deal fuels surge into stock funds Bismarck Tribune

The Associated Press - - Barron's (blog)

all 192 news articles »

This story got wide play yesterday afternoon, as the 192 news articles linked above suggest. Some pundits have glommed on to this as being a contrarian sell signal. The truth is that it’s just a reversal of the “beat the cliff” tax selling that reached a crescendo in December as the chart below, based on data from the ICI shows. Their data is a week behind the Lipper data. What Lipper and none of the hysteria stories mentioned was that selling reached a 4 year record high in December, and at $8.2 billion in net outflows for the week ended January 2, was even  at a higher rate than the December average of around $6 billion per week.  So I don’t put much “stock” in these stories.

Click to enlarge

In fact, the only “sentiment” that matters is Primary Dealer sentiment, and the Fed is stuffing their accounts with $120 billion in cash per month. This is as great as the liquefaction of the Primary Dealers that took place under QE 1 beginning in March 2009, and we know what happened then. So I’m not to worried about this ridiculous story about the surge in mutual fund flows. Using that information as a signal for market direction is like looking at the gamblers’ betting patterns in the casino for a clue as to who will win and who will lose. Obviously, we already know the answer. The House always wins. In this case the Primary Dealers are the House. They own the casino. They are flush with a tidal wave of cash, and will continue to be flush for months to come. I’ll place my bets accordingly .

Stay up to date with the machinations of the Fed, Treasury, Primary Dealers and foreign central banks in the US market, along with regular updates of the US housing market, in the Fed Report in the Professional Edition, Money Liquidity, and Real Estate Package. Try it risk free for 30 days. Don’t miss another day. Get the research and analysis you need to understand these critical forces. Be prepared. Stay ahead of the herd. Click this link and begin your risk free trial NOW!

Make a Comment

Econintersect wants your comments, data and opinion on the articles posted. You can also comment using Facebook directly using he comment block below.

 navigate econintersect .com


Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day


Asia / Pacific
Middle East / Africa
USA Government

RSS Feeds / Social Media

Combined Econintersect Feed

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution



  Top Economics Site Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2018 Econintersect LLC - all rights reserved